52013DC0169

The EU has a clear
framework to steer its energy and climate policies up to 2020. This framework
integrates different policy objectives such as reducing greenhouse gas (GHG)
emissions, securing energy supply and supporting growth, competitiveness and
jobs through a high technology, cost effective and resource efficient approach.
These policy objectives are delivered by three headline targets for GHG
emission reductions, renewable energy and energy savings. There are additional
targets for energy used by the transport sector. In parallel, the EU has put in
place a regulatory framework to drive the creation of an open, integrated and
competitive single market for energy which promotes the security of energy
supplies. While the EU is making good progress towards meeting the 2020
targets, creating the internal market for energy and meeting other objectives
of energy policy, there is a need now to reflect on a new 2030 framework for
climate and energy policies. Early agreement on the 2030 framework is important
for three reasons:

·
First, long investment cycles mean that
infrastructure funded in the near term will still be in place in 2030 and
beyond and investors therefore need certainty and reduced regulatory risk.

·
Second, clarifying the objectives for 2030 will
support progress towards a competitive economy and a secure energy system by
creating more demand for efficient and low carbon technologies and spurring
research, development and innovation, which can create new opportunities for
jobs and growth. This in turn reduces both directly and indirectly the economic
cost.

·
Third, while negotiations for a legally binding
international agreement on climate mitigation have been difficult, an international
agreement is still expected by the end of 2015. The EU will have to agree on a
series of issues, including its own ambition level, in advance of this date in
order to engage actively with other countries.

This framework for
2030 must be sufficiently ambitious to ensure that the EU is on track to meet
longer term climate objectives. But it must also reflect a number of important
changes that have taken place since the original framework was agreed in
2008/9:

·
the consequences of the on-going economic
crisis;

·
the budgetary problems of Member States and
businesses who have difficulty mobilising funds for long term investments;

·
developments on EU and global energy markets,
including in relation to renewables, unconventional gas and oil, and nuclear;

·
concerns of households about the affordability
of energy and of businesses with respect to competitiveness;

·
and the varying levels of commitment and
ambition of international partners in reducing GHG emissions.

The 2030 framework
must draw on the lessons from the current framework: what has worked, what has
not worked and what can be improved. It should take into account international
developments and spur stronger international climate action. And it must
identify how best to maximise synergies and deal with trade-offs between the
objectives of competitiveness, security of energy supply and sustainability.

The framework should
also take into account the longer term perspective which the Commission laid
out in 2011 in the Roadmap for moving to a competitive low carbon economy in
2050, the Energy Roadmap 2050, and the Transport White Paper. The European
Parliament has adopted resolutions on each of the Roadmaps[1]. These Roadmaps were developed
in line with the objective of reducing GHG emissions by 80 to 95% by 2050
compared to 1990 levels as part of necessary efforts by developed countries as
a group. The scenarios in these Roadmaps suggested the following key findings:

·
By 2030 GHG emissions would need to be reduced
by 40% in the EU to be on track to reach a GHG reduction of between 80-95% by
2050, consistent with the internationally agreed target to limit atmospheric
warming to below 2°C.

·
For renewables, the policy scenarios in the
Energy Roadmap 2050 indicate a share of around 30% in 2030.

·
Significant investments are needed to modernise
the energy system, with or without decarbonisation, which will impact the
energy prices in the period up to 2030.

The aim of this Green Paper is to consult
stakeholders to obtain evidence and views to support the development of the
2030 framework. It begins with an overview of the current framework and what
has been achieved and then presents the issues where stakeholder input is
sought. In parallel, the Commission is consulting on issues relating to the
international negotiations of a new legally binding agreement for climate
action as well its policy to enable the demonstration of the carbon capture and
storage technology.

2.
The current EU policy framework and what has
been achieved

Central to the current policy framework are
the three headline targets to be achieved by 2020: (1) an EU based target for
GHG emission reductions of 20% relative to emissions in 1990; (2) a 20% share
for renewable energy sources in the energy consumed in the EU with specific
target for the Member States; (3) 20% savings in energy consumption compared to
projections. In addition, there are specific 2020 targets for renewable energy
for the transport sector (10%) and decarbonisation of transport fuels (6%). The
framework also recognises Member States' different energy mixes, economic
wealth and capacity to act, and therefore includes mechanisms to ensure a fair
distribution of effort between them. It includes measures to address the risk
of carbon leakage and its impacts on energy-intensive industry sectors. It is
supported by a broad set of Union financial instruments and a Strategic Energy Technology
plan (the SET-Plan). Furthermore the Commission has proposed revising the EU
legislation on taxation of energy products and electricity[2] to remove overlaps between
existing fiscal instruments. The framework for 2020 is complemented by the
Energy 2020 Strategy[3]
which assesses the challenges and measures to ensure a competitive, sustainable
and secure energy system.

2.1.
The 20% GHG reduction target and implementing
measures

The 20% GHG reduction target for 2020
compared to 1990 is implemented through the EU Emissions Trading System (EU
ETS) and the Effort Sharing Decision which defines reduction targets for the
non-ETS sectors, and its achievement is supported through EU and national
policies to reduce emissions. In 2011 GHG emissions as covered by the climate
and energy package were estimated at 16% below 1990 levels.

The ETS delivers a uniform carbon price for
large industrial installations, the power sector and in the aviation sector. It
covers more than 10.000 installations and nearly 50% of all EU GHG emissions.
This uniform price ensures that climate goals are met cost-effectively and that
business across the EU has a level playing field. The carbon price is now part
of EU businesses' operational and investment decisions and has contributed to
substantial emissions reductions. But it has not succeeded in being a major
driver towards long term low carbon investments. Despite the fact that the ETS
emission cap decreases to around -21% by 2020 compared to 2005 and continues to
decrease after 2020, in principle giving a legal guarantee that major low
carbon investments will be needed, the current large surplus of allowances,
caused in part by the economic crisis, prevents this from being reflected in
the carbon price. The low carbon price is not providing investors with
sufficient incentive to invest and increases the risk of "carbon
lock-in". Some Member States are concerned with this evolution and have
taken, or are considering taking national measures, such as taxes for carbon
intensive fuels in ETS sectors. There is an increasing risk of policy
fragmentation threatening the Single Market, with national and sectoral
policies undermining the role of the ETS and level playing field it was meant
to create. The Carbon Market Report assesses in more detail the functioning of
the ETS[4].

The Effort Sharing Decision (ESD) sets
national targets for GHG emissions in the sectors not covered by the ETS. The
aggregate target is a 10% emission reduction at EU level in 2020 compared to
2005. Many EU policies, including sector specific legislation and initiatives,
have contributed to reducing emissions in these sectors. They range from
policies that improve CO2 and energy efficiency for cars, the
residential sector and energy consuming equipment, to specific waste,
environmental, agricultural and land use policies (see annex). The
implementation of policies to achieve the renewables and energy efficiency
target also contributes to emissions reductions. National targets are
distributed between Member States according to economic capacity. Some need to
reduce emissions compared to 2005 whilst others are permitted a limited growth
in emissions. In aggregate the EU is on track to achieve the 10% reduction
target, but significant differences exist between Member States. Half of them
still need to take additional measures. Additionally the ESD enables Member
States to meet their targets flexibly, be it through the acquisition of
international credits or through trade with Member States outperforming their
targets.

2.2.
The renewable energy target and implementing
measures

The EU is making progress towards meeting the 2020 target of 20% renewable energy in gross
final energy consumption. In 2010, the renewables share in the EU was 12.7%
compared to 8.5% in 2005. In the period 1995-2000 when
there was no regulatory framework, the share of renewable energy grew by 1.9% a
year. Following the introduction of indicative targets (2001-2010), the share
of renewable energy grew by 4.5% per annum. With legally binding national targets
growth has increased but needs to average 6.3% per year to meet the overall
2020 target. The share of renewables in transport
reached 4.7% in 2010 compared to only 1.2% in 2005. In the heating and cooling sector,
renewable energy continues to grow and its share should nearly double by 2020.
However, new measures will be needed for most Member States to achieve their
2020 targets reflecting the scaling back of support schemes and more difficult
access to finance in the context of the economic crisis.

The Commission
provided a state of play on renewable energy in the EU in 2012[5]. An updated progress report is
published alongside this Green Paper. Investments in research and development,
innovation and large scale deployment in the sector have contributed to
significant reductions in the cost of renewable energy technologies. There are
key challenges associated with
large scale deployment such as the full integration of
renewables into the EU's electricity system in a way that deals with
intermittency, and improving co-operation among Member States in meeting
targets. The coupling of the EU's wholesale electricity
markets will help to integrate renewable energy into the electricity system as
will the roll-out of smart grids which provide opportunities to adapt
generation, grid control, storage and consumption to the changing situation on
markets. However, massive investments in transmission and distribution grids,
including through cross-border infrastructure, to complete the internal energy
market will also be needed to accommodate renewable energy. Another important
challenge is to ensure over time that renewable energy sources become more
cost-efficient so as to limit the use of support
schemes only to those technologies and areas that still
need it. Such schemes
should be designed to avoid overcompensation, improve cost efficiency, encourage high GHG reduction, strengthen innovation, ensure
sustainable use of raw materials, to be adaptable to cost developments to avoid
subsidy dependence, be consistent across Member States and, in particular with
regard to biofuels, ensure WTO compatibility.

2.3.
The energy savings target and implementing
measures

The 2020 target of saving 20% of the EU's
primary energy consumption (compared to projections made in 2007) is not
legally binding for Member States, but significant progress has nevertheless
been made. After years of growth, primary energy consumption peaked in
2005/2006 (around 1825 Mtoe) and has been slightly decreasing since 2007 (to
reach 1730 Mtoe in 2011). This trend is partly due to the economic crisis and
partly due to the effectiveness of existing policies. It is also due to reduced
energy intensity of EU industry which was 149 toe per million euro in 2010,
down from 174 in 2000 and 167 in 2005.

With the adoption of the Energy Efficiency
Directive (EED) in 2012 there is now a comprehensive legislative framework at
EU level. This needs to be fully implemented by Member States. The EED will
help to drive progress in this area, although the Commission's preliminary
analysis suggests that with current policies the 2020 target will not be met.[6] The lack of appropriate tools
for monitoring progress and measuring impacts on the Member State level is part
of the problem. Another major challenge is to mobilise the funds needed to
ensure continued progress.

Since 2009-2010, implementing measures have
been adopted under the Ecodesign and Energy Labelling Directives on energy
related products. These measures reduce the energy demand of industrial and
household products leading to savings for end-users. Measures have been adopted
for a number of electronic appliances, including domestic dishwashers,
refrigerators, washing machines, televisions and tyres as well as industrial
products such as motors, fans and pumps. The estimated impact of the adopted
ecodesign and labelling measures are energy savings in the range of 90 Mtoe in
2020.

To address the energy consumed in the
building stock, in particular for heating and cooling purposes, the EU adopted
a revised Energy Performance of Buildings Directive (EPBD) in 2010. Besides the
obligation for Member States to apply minimum energy performance requirements
for new and existing buildings, the Directive requires them to ensure that by
2021 all new buildings are "nearly zero-energy buildings." However,
delays and incomplete national measures to implement this directive risk
undermining the necessary contribution of the buildings sector towards lower
GHG emissions and reduced energy consumption. The cost-effective savings potential
in the building sector is estimated to be 65 Mtoe by 2020. The EU has supported
the development of energy efficient technologies, including through public
partnerships on energy efficient buildings, green cars and sustainable
manufacturing.

In the transport sector, the Regulations
establishing performance standards for light duty vehicles have led to
substantial reductions in GHG emissions reflected in the fleet average CO2
emission of new cars from 172 g per kilometre in 2000 to 135.7 g per kilometre
in 2011.

2.4.
Security of supply and affordability of energy
in the internal energy market

The 2009 climate and energy package is not
the only work stream in this area. In 2009 and 2010, the EU adopted
comprehensive legislation on the internal energy market for electricity and
natural gas and, in the wake of two gas supply crises, the Regulation on
security of gas supplies. As none of the energy policy objectives can be
reached without adequate grid connections, the Commission has also proposed a
Regulation on Trans-European Energy Infrastructure Guidelines on which
political agreement has been reached by the European Parliament and by Council.
It addresses infrastructure challenges to ensure true interconnection in the
internal market, integration of energy from variable renewable sources and
enhanced security of supply.[7]

Other EU measures, such as the European Strategic
Energy Technology plan are in place to encourage a technological shift through
development and demonstration projects for new and innovative technologies:
e.g. second generation biofuels, smart grids, smart cities and intelligent
networks, electricity storage and electro-mobility, carbon capture and storage
technologies and next generation nuclear and renewable heating and cooling. In
early 2013, the Commission also proposed a directive on the deployment of
alternative fuels infrastructure which will be supported by the proposed
revision of the TEN-T Guidelines.

A number of challenges were not addressed
at the time of the 2009 climate and energy package. For example, the necessary
transmission and distribution infrastructure were not defined. The management
challenges linked to the introduction of renewables, including dealing with the
variable supply of certain renewables (e.g. wind and solar) were also not fully
considered and the impact of a large number of national support schemes for
renewables on market integration was underestimated.

The Third Energy package addressed the
issue of how to stimulate competition on the market, but did not address the
issue of whether the market offered the necessary incentives to invest in
generation, distribution and transmission, and storage capacity in a system
with greater shares of renewables. Until renewable energy sources become
cost-competitive, the objective of a more sustainable energy system must go
hand in hand with the need for a fully liberalised and integrated energy market
capable of mobilising and allocating investment efficiently.

Important developments and trends taking
place inside and outside the EU include the growing energy import dependency of
the EU and the technological progress of our main competitors, the new supply
routes, as well as the rise of new energy producers in Africa and Latin America.
This will all have an impact on the energy cost and security of supply in the
EU.

3.
Key Issues for this consultation

The 2030 framework for climate and energy
policies will build on the significant progress already made in this area. It
must draw on the lessons from the current framework and identify where
improvements can be made. The experience and views of stakeholders, backed up
where possible with sound evidence, are essential on four broad issues:
targets; other policy instruments; competiveness; and the different capacity of
Member States to act.

3.1.
Targets

Fundamental issues for a new 2030 framework
for climate and energy policies relate to the types, nature and level of
targets and how they interact. Should the targets be at EU, national or
sectoral level and be legally binding? There are
diverging views on the need for targets and types of targets. While experience with the current framework shows that targets provide
political momentum, a long term vision for investment, and a benchmark for
measuring progress, some stakeholders argue that the
existing targets and policies to reach them are not necessarily coherent or
cost efficient, or that they do not take competitiveness and the economic
viability and maturity of technologies sufficiently into account. The 2030
framework should recognise the evolution of technology over time and promote research
and innovation. There is a need, therefore, to assess which targets can best,
and most simply and cost effectively, drive energy and climate policies up to
2030, and whether the current approach can be streamlined particularly with
reference to the need for various sub-targets such as those in the transport
sector. This analysis should also address the issue of whether having only a GHG emissions target for 2030 would be appropriate, taking
into account other objectives such as security of supply and competitiveness.

The
current climate and energy targets for GHG reduction, the share of renewable
energy sources and energy savings were designed to be mutually supporting and
there are indeed interactions between them. Higher shares of renewable energy
can deliver GHG reductions so long as these do not substitute other low-carbon
energy sources while improved energy efficiency can help reduce GHG emissions
and facilitate attainment of the renewables target. There are obvious synergies
but there are also potential trade-offs. For example, more than anticipated
energy savings and greater than expected renewable energy production can lower
the carbon price by weakening the demand for emission allowances in the ETS.
This in turn can weaken the price signal of the ETS for innovation and
investments in efficiency and the deployment of low-carbon technologies whilst
not affecting attainment of the overall GHG reduction target.

A
2030 framework with multiple targets will have to recognise these interactions
explicitly. It should also recognise that higher shares of renewable energy
sources and greater energy savings will not alone ensure greater
competitiveness or security of supply. Dedicated policies will remain necessary
and there may also be a need for additional indicators that more directly
capture these objectives.

There
is a broad consensus that interim targets for GHG emissions reductions will be
necessary to reach the aspiration of an 80-95% reduction by 2050. The key issue
is deciding on the most appropriate level for such an intermediate target. The
2050 Low carbon Economy Roadmap suggests that a 40% reduction in emissions by
2030 compared to 1990 would be cost-effective. A reduction of less than 40%
would increase the costs of decarbonising the economy over the longer term.
While the roadmaps suggest that GHG reductions of 40% by 2030 can be achieved
without unduly increasing the costs for our energy system, mobilising the funds
necessary to cover the capital costs for significant up-front investments will,
however, be a challenge.

The
Energy Roadmap for 2050 has shown that the share of renewables in the energy
system must continue to increase after 2020. A 2030 target for renewables would
have to be carefully considered as many renewables sources of energy in this
time frame will no longer be in their infancy and will be competing
increasingly with other low-carbon technologies. Consideration should also be
given to whether an increased renewable share at EU level could be achieved
without a specific target but by the ETS and regulatory measures to create the
right market conditions. The shape of a possible renewables target will depend
on (i) whether a target is considered necessary to ensure increased shares in
renewables post 2020 and thereby contribute to more indigenous energy sources,
reduced energy import dependence and jobs and growth; and (ii) if and how this
can be achieved without undesirable impacts of renewables support schemes on
energy markets and energy prices and public budgets. It must be established
whether objectives on renewable energy can be best met with a new headline
target with or without sub-targets for sectors such as transport, industry and
agriculture, and/or other specific measures. Any target or policy for
renewables will have to take into account the growing evidence-base on
sustainability, costs, the state of maturity of technologies and its innovation
potential.

The
EU framework for energy efficiency policy has just been updated through the
adoption of the EED and a review will be carried out in 2014 with respect to
the 2020 target. Discussions on a 2030 energy savings target must be seen in
this context. There are a number of issues to consider. First, energy
efficiency, and the resulting energy savings, are acknowledged in the Energy
Roadmap 2050 as a "no-regrets" option for the energy system. While
evidence on how the current system is performing will not be fully available
until 2014 or later, ensuring consistency of a possible energy savings target
with any other targets will be essential. Consideration will also have to be
given to whether progress on energy efficiency would best be driven by targets
for Member States or by sector specific targets.

It
will also be necessary to consider if the metric for such a target should
continue to be absolute energy consumption levels or whether a relative target
related to energy intensity would be more appropriate (e.g. energy consumption
relative to GDP or gross value added). While an absolute target might better
ensure the overall savings objective, a relative target might better take into
account the dynamics of the EU economy and the reality of economic development.

Unlike
for GHG emissions reductions and renewables, the current approach to energy
efficiency is based on a combination of aspirational targets and binding
measures. The need for EU legislation (e.g. ecodesign framework, the EED, the
EPBD) under the 2020 framework is linked, at least partially, to the absence of
legally binding energy savings targets for Member States. Any legally binding
target for energy savings/intensity would need to leave room for manoeuvre for
Member States for meeting the target with possibly fewer binding measures at EU
level. However, such an approach would have to take into account that much of
the EU legislation which contributes to reduced energy consumption also plays a
fundamental role in creating the internal market for these products (e.g. the
ecodesign framework). If targets remain aspirational, consideration will have
to be given to whether current concrete measures are sufficient or whether new
measures would be necessary. A key issue will be to what extent energy markets,
through the price signal and demand response, will themselves sufficiently
incentivise energy efficiency improvements, including behavioural change of
consumers, and whether the ETS and its impact on electricity prices will
provide incentives for energy savings also in the absence of specific targets
or measures. The relatively low price elasticity of energy demand in many
important sectors of the economy and projected future levels as well as the
variability of the ETS price will have to be taken into account.

3.2.
Coherence of policy instruments

The 2020 targets are implemented through
policy instruments at EU level which are closely related to the internal
market. Member States have larger room for manoeuvre when implementing EU
legislation for renewable
energy and energy efficiency, and GHG emissions outside the ETS such as in the
road transport sector. This has resulted in different national approaches for
renewables support schemes, energy and CO2 taxation, energy
performance standards for buildings and other energy efficiency policies.

A combination of instruments is likely to
be needed to address the different policy goals and market barriers. These
instruments will interact with one another as described above. Some
stakeholders have criticised the lack of overall consistency between policies
because of such interactions and have pointed to the need to improve the
cost-efficiency of various climate and energy measures, considering
technological feasibility. In addition, national measures should not lead to
fragmentation of the internal market. A strong accent should be put on
investments in infrastructure, in particular in networks, that will deepen EU
market integration and ensure sustainability, competitiveness and security of
supply.

The 2030 policy framework should,
therefore, strike a balance between concrete implementing measures at EU level
and Member States' flexibility to meet targets in ways which are most
appropriate to national circumstances, while being consistent with the internal
market. The current balance of the approach between EU level instruments and Member
States targets/national instruments will have to be assessed in more detail,
including the impacts of fossil fuels subsidies. As before, the distribution of
efforts will need to be considered as well.

Beyond regulatory instruments, the EU also
provides significant financial support linked to climate change and sustainable
energy, in particular through Cohesion Policy, the EU Research Programmes, and
in the future the Connecting Europe Facility. Climate action objectives will
represent at least 20% of EU spending in the period 2014-2020 and therefore be
reflected in the appropriate instruments to ensure that they contribute to
strengthen energy security, building a low-carbon, resource efficient and
climate resilient economy that will enhance Europe's competitiveness and create
more and greener jobs[8].

Future access to international credits
after 2020 will need to be assessed. The use of international credits can limit
costs but they also contribute to uncertainty on what is required domestically,
and have contributed to the surplus of allowances in the ETS. Furthermore, EU
industry and governments via the Clean Development Mechanism have subsidised
competing sectors especially in emerging economies such as in China, India and
Brazil. Shifting away from project-based offsets towards emission trading and
other market mechanisms might better incorporate the different capacities of
countries to act on climate change and support progress towards developing a
more global carbon market with wide international participation.

For sectors like shipping and aviation, the
policy efforts also include a coordinated push for globally agreed standards
and policies to effectively deliver global emission
reductions. As a first step,
the Energy Efficiency Design Index agreed at the
International Maritime Organization entered into force in 2013 and is expected
to slow the increase of GHG emissions from global shipping.

3.3.
Fostering the competitiveness of the EU economy

One of the fundamental objectives of EU
energy policy is to ensure that the energy system contributes to the
competitiveness of the EU economy by ensuring competitive domestic and
international energy markets and prices which are internationally competitive
and represent affordable energy for final consumers. This is especially
important for vulnerable households and industry sectors that are exposed to
international competition and for which energy is an important production
factor. As the role of electricity is expected to increase during the
transition of the energy system, electricity costs are of particular importance
in a 2030 perspective.

Energy and climate policies can drive
demand and growth in the low carbon economy. The EU is a frontrunner in clean
and more energy-efficient technologies, products and services and
eco-technologies which together are expected to generate some 5 million jobs in
the period up to 2020[9].
Moreover, many of these policies contribute to reduced air pollution and health
improvements. At the same time, the policies have been criticised for having a
negative impact on energy prices, adversely impacting affordability of energy
for vulnerable households and the competitiveness of energy intensive sectors
even though they may reduce industry's exposure to energy costs and improve
resilience to energy price peaks.

While wholesale energy prices have
increased moderately in the EU, there is evidence that end-user prices of
electricity for many business and households have increased more significantly
in real terms over the last decade. The Energy Roadmap 2050 suggests that this
trend will continue in the future. Developments in international markets and
exploitation of unconventional hydrocarbons may lead to an increasing
divergence of prices in the EU compared to those in other major industrial economies
such as the USA where shale gas is now an increasing energy source. In 2012, industry gas prices were more than four times lower in the USA than in Europe[10]. It is
clear that this trend is driven by many factors other than the EU's climate and
energy policies and that EU wholesale electricity prices are still determined
to a large extent by the price of fossil fuels. Member State decisions on
tariffs, levies and taxes also have a significant impact on end user prices.
These factors must be taken into account when designing new policies. The various drivers of national energy costs including taxation
need to be analysed in a differentiated manner as their impact on overall
energy production costs appears to differ greatly. A
number of issues need to be addressed in this context.

First, full implementation of the internal
market legislation is critical to keep prices in check and help meet targets
cost-effectively, both by means of increased competition in the market and by
more efficient use of energy infrastructure (by means of the Network codes).

Second, there is a need to enable the
future exploitation of indigenous oil and gas resources, both conventional and
unconventional in an environmentally safe manner, as they could contribute to reducing
the EU's energy prices and import dependence.

Third, further diversification of energy
supply routes could improve competition on energy markets and significant
long-term savings can be achieved by investments in energy efficiency. Further
deployment of renewable power generation must be accompanied by improved
management of grids, reduced costs and improved performance of technologies and
continued support for innovation.

Fourth, concerns have been expressed that
the EU's commitment to tackling climate change is not fully reciprocated
elsewhere, and that this has an impact on competitiveness. At the same time,
the Union's commitment to reduce GHG emissions by 20% by 2020 contributed to
the progress made since the 2009 Copenhagen Climate
Conference. More than 90 countries have now adopted pledges with varying
degrees of ambition. The international community has also endorsed the
objective to limit global warming to below 2°C. In addition, several
countries are implementing or developing legislation for their own emissions
trading system (Switzerland, Australia, New Zealand, South Korea, China and
several US states). Notwithstanding these developments, the EU's offer of a
conditional target of 30% GHG reductions has not mobilised pledges and actions
that would ensure that aggregate efforts by 2020 are in line with the 2°C
objective. Hence, the crucial need to engage further with third countries, and
for the Durban Platform to deliver an agreement by 2015 on post 2020. This is all the more important given that the EU represents only
11% of global GHG emissions and that this share is decreasing so that effective
international action is required to tackle climate change[11].

Fifth, in aviation and maritime, EU efforts
strongly pursue progress in the
relevant international fora to ensure global participation and a level field.

Sixth, it is clear that higher ETS prices and policies to expand renewables generation
capacity by providing support or preferential treatment to bring them to the
market could increase electricity prices. At the same time, the ETS creates a
level playing field in the EU and minimises GHG reduction costs in the covered
sectors. The ETS also includes measures to limit impacts on the competitiveness
of energy intensive sectors which are exposed to the risk of carbon leakage.
These measures will continue until 2020. Given the build-up of free allowances
in industrial sectors and the access to cheap international credits, the impact
on these sectors is likely to be modest at least up to 2020. State aid rules
related to the ETS allow Member States, as from 2013 to provide compensation
for part of the indirect ETS costs for the most electricity intensive sectors.
Furthermore, environmental state aid rules currently allow targeted exemptions
for industry from energy related taxes. The 2030 framework will need to
consider whether and how this approach should be continued.

Finally in designing a framework for 2030
consideration should be given to whether ETS related revenue could be used to
further assist sectors to innovate. At present this option is mainly driven
through Member States' use of auctioning revenues within the allowed boundaries
of state aid provision, even though the existing framework does foresee
innovative Union finance in the form of the NER300 limited to renewable energy
and carbon capture and storage projects.

3.4.
Acknowledging the differing capacity of Member
States

Member States are very diverse in terms of
comparative wealth, industrial structure, energy mix, building stocks, carbon
and energy intensity, exploitable renewable resources, and social structure. Individual
consumer groups have different capacities to invest and adapt. This diversity
must be taken into account when developing a policy framework for 2030. Climate
and energy targets impact each Member State and their citizens differently and
options to enable effective
cooperation and an equitable sharing of the required efforts will need to be
assessed as part of the new framework.

The current energy and climate policy
framework reflects the differing capacities of Member States by sharing the
effort of reaching Union climate and energy targets amongst the Member States,
with a lighter burden falling on lower income Member States. Auctioning
revenues are also partially redistributed to compensate for cost differences.
There are also cooperation mechanisms in the Renewable Energy Directive that
enable renewable energy produced in one Member State to count towards the
target of another. However, despite the potential economic benefits for both
sides this scheme, with the exception of Sweden and Norway, has not been used
so far. To take into account national circumstances, the
Energy Efficiency Directive provides a "menu" of flexibilities that
Member States can apply to their 1.5% yearly saving targets including a gradual
phase-in of the 1.5% target, exclusion of the ETS sector, inclusion of the
energy transformation and distribution sector and recognition of early action.
These flexibilities can be used cumulatively but must not undermine the overall
energy savings required by the Directive.

There is a need to consider whether for the
2030 framework, similar distribution tools should be maintained or whether,
depending on the ambition level and nature of future targets and measures,
alternative approaches are necessary. Whilst possibly working against the
objectives of the internal energy market, differentiated targets per Member
State can improve fairness, but can also increase the overall costs to meet the
objectives if they are not coupled with sufficient flexibility in meeting them,
such as trading mechanisms. Any 2030 framework will need to consider if
sufficient flexibility exists between Member States to allow cost efficient
achievement of differentiated targets. In this context, it should also be
considered that those Member States where investments are most needed and with
the most options available for cost-effective GHG emission reductions,
renewables development, energy efficiency improvements etc. often have less
economic capacity to take advantage of them. Moreover, some of these Member
States face difficulties in obtaining sufficient support for changes of
industrial processes and energy use that could impact jobs and reliance on
domestic energy resources. Access to finance for investments, be it through
direct funding or smart finance, is already part of the toolbox of EU policies[12] but may have to be enhanced in
a 2030 perspective. Such measures could contribute to a fair and equitable
sharing of effort, while at the same time facilitate public acceptance and
engage all parties concerned in the transition to a sustainable, secure and
competitive economy.

Member State-specific information will need
to be prepared and presented as part of the new framework in order to inform
discussions about the equitable distribution of effort and to ensure that an
undue burden does not fall on any Member State.

4.
Questions
4.1.
General

·
Which lessons from the 2020 framework and the
present state of the EU energy system are most important when designing policies
for 2030?

4.2.
Targets

·
Which targets for 2030 would be most effective
in driving the objectives of climate and energy policy? At what level should
they apply (EU, Member States, or sectoral), and to what extent should they be
legally binding?

·
Have there been inconsistences in the current
2020 targets and if so how can the coherence of potential 2030 targets be
better ensured?

·
Are targets for sub-sectors such as transport,
agriculture, industry appropriate and, if so, which ones? For example, is a
renewables target necessary for transport, given the targets for CO2 reductions
for passenger cars and light commercial vehicles?

·
How can targets reflect better the economic
viability and the changing degree of maturity of technologies in the 2030
framework?

·
How should progress be assessed for other
aspects of EU energy policy, such as security of supply, which may not be
captured by the headline targets?

4.3.
Instruments

·
Are changes necessary to other policy
instruments and how they interact with one another, including between the EU
and national levels?

·
How should specific measures at the EU and
national level best be defined to optimise cost-efficiency of meeting climate
and energy objectives?

·
How can fragmentation of the internal energy
market best be avoided particularly in relation to the need to encourage and
mobilise investment?

·
Which measures could be envisaged to make
further energy savings most cost-effectively?

·
How can EU research and innovation policies best
support the achievement of the 2030 framework?

4.4.
Competitiveness and security of supply

·
Which elements of the framework for climate and
energy policies could be strengthened to better promote job creation, growth
and competitiveness?

·
What evidence is there for carbon leakage under
the current framework and can this be quantified? How could this problem be
addressed in the 2030 framework?

·
What are the specific drivers in observed trends
in energy costs and to what extent can the EU influence them?

·
How should uncertainty about efforts and the
level of commitments that other developed countries and economically important
developing nations will make in the on-going international negotiations be
taken into account?

·
How to increase regulatory certainty for
business while building in flexibility to adapt to changing circumstances (e.g.
progress in international climate negotiations and changes in energy markets)?

·
How can the EU increase the innovation capacity
of manufacturing industry? Is there a role for the revenues from the auctioning
of allowances?

·
How can the EU best exploit the development of
indigenous conventional and unconventional energy sources within the EU to
contribute to reduced energy prices and import dependency?

·
How can the EU best improve security of energy
supply internally by ensuring the full and effective functioning of the
internal energy market (e.g. through the development of necessary
interconnections), and externally by diversifying energy supply routes?

4.5.
Capacity and distributional
aspects

·
How should the new framework ensure an equitable
distribution of effort among Member States? What concrete steps can be taken to
reflect their different abilities to implement climate and energy measures?

·
What mechanisms can be envisaged to promote
cooperation and a fair effort sharing between Member States whilst seeking the
most cost-effective delivery of new climate and energy objectives?

·
Are new financing instruments or arrangements
required to support the new 2030 framework?

5.
Submission of responses to the Consultation

The consultation will be open for until 2
July. For more information on how to contribute to this consultation, see:

(14)
Directive 2009/33/EC on the promotion of clean
and energy-efficient road transport vehicles

(15)
Council Directive 2003/96/EC restructuring the
Community framework for the taxation of energy products and electricity

(16)
Regulation 1222/2009 on the labelling of tyres
with respect to fuel efficiency and other essential parameters

(17)
Regulation 228/2011 amending Regulation (EC) No
1222/2009 of the European Parliament and of the Council with regard to the wet
grip testing method for C1 tyres

(18)
Regulation 1235/2011 amending Regulation (EC) No
1222/2009 of the European Parliament and of the Council with regard to the wet
grip grading of tyres, the measurement of rolling resistance and the verification
procedure

(19)
Regulation (EC) No 714/2009 of 13 July 2009 on
conditions for access to the network for cross-border exchanges in electricity
and repealing Regulation (EC) No 1228/2003

(20)
Regulation (EC) No 715/2009 of 13 July 2009 on
conditions for access to the natural gas transmission networks and repealing
Regulation (EC) No 1775/2005

(21)
Decision on accounting rules and action plans on
greenhouse gas emissions and removals resulting from activities related to land
use, land use change and forestry.

2. Key
Reference Documents

A Roadmap for moving to a competitive
low carbon economy in 2050

http://ec.europa.eu/clima/policies/roadmap/index_en.htm

Energy Roadmap 2050

http://ec.europa.eu/energy/energy2020/roadmap/index_en.htm

White Paper: Roadmap to a Single
European Transport Area – Towards a competitive and resource efficient
transport system

[1] Links to the European Parliament Resolutions and to
the Roadmaps are provided in the Annex in the section on Key Reference
Documents.

[2] COM(2011) 169 final.

[3] COM(2010) 639 final.

[4] Report State of the European carbon market in 2012
(COM(2012) 652). The report consults on possible ways of addressing the surplus
of allowances in the ETS including a widening of the sectors it covers.

[5] Communication Renewable Energy: a major player in the
European energy market COM(2012) 271.

[6] The implementation of measures in the Transport White
Paper, further ecodesign measures, smart metering roll-out and smart grid
deployment with the resulting demand response should contribute to closing the
gap.

[7] For projects identified as projects of common
interest (PCIs), the Regulation introduces measures to accelerate permitting
procedures, including through a maximum time-limit and streamlining of
environmental assessment procedures. The Regulation also provides better
incentives to investors through enhanced regulatory provisions, and it sets the
conditions for EU financial assistance under the proposed Connecting Europe
Facility.

[8] As decided by the European Council at its meeting 7-8
February 2013 on the Multiannual Financial Framework.

[9] Communication Towards a job-rich recovery (COM(2012) 173 final).

[10] According to IEA data, real
electricity prices for industry in Europe (OECD) increased on average by 38%
between 2005 and 2012 while they decreased by 4% in the USA. For households,
from 2005 to 2012 real electricity prices went up by 21.8% in Europe (OECD) and
by 8.4% in the USA. IEA "Energy Prices & Taxes, 4th Quarter
2012".

[11] The prospects for a new global climate agreement are
dealt with in a separate Consultative Communication The 2015 International
Climate Change Agreement: Shaping international climate policy beyond 2020.

[12] For instance the proposed European Regional Development
Fund for 2014-2020 and the Connecting Europe Facility.